Our mission at The Gresh Group is to be your best resource for real estate advice. Whether you are a buyer, seller, or investor, our team of professionals can answer any questions you might have about real estate. Subscribe to this blog to get the latest news on local market trends and receive expert tips for buying or selling a home.
Watch on your mobile device >> The housing market in the Washington D.C. area and Northern Virginia has been booming! According to an article published by the Real Estate Business Intelligence, the median sale price today is over $30,000 higher than it was in May of 2012. Low inventory and a demand for homes have continued to put pressure on prices raising the median sales price in most of the DC metro area.
Inventory is very low despite the ‘recent surge in new listings.’ This is good news for sellers. A properly priced home in good condition will fly off the market. In fact, the median-days-on market is just nine days.
Watch on your mobile device >> Homeowners
Insurance is great – it covers a lot of things like fire, theft and
vandalism – and in case there is a storm that causes significant damage,
the policy’s right there to protect the owner. But what about a policy
that looks after the interests of the property while it listed on the
market and one that works to the advantage of both sides of the buying
and selling fence? A home warranty is a perfect supplement to a
homeowner’s insurance policy and it broadens the overall coverage in a
variety of ways. Here is a rundown of the variances between the two and
how a seller getting a warranty policy on their home for sale is a
great tool!
The Benefits of a Home Warranty Policy
While
home insurance largely covers catastrophic incidences and damage, a
home warranty policy goes far beyond in that it address the home
including wear and tear items. Also, maintenance and repair is
typically includes in a home warranty policy. As a selling tool, this
is fantastic, because during the process – or even after the home is
sold – for up to 13 months, the areas of the home covered under the
policy are warranted. Oftentimes, a buyer will come across an issue
with something in the home that could become a deal breaker but with the
added peace of mind of a warranty, the seller can sit back and relax
knowing that most things will likely be covered. Examples of things
that fall into range of coverage on a home warranty are flooring,
plumbing systems, electrical systems, and wear and tear of these areas
plus also the furnace and in come cases, the roofing or other major
components of the home.
Home Insurance Policy Advantages
The single biggest difference between a home warranty versus a home owners insurance policy
is that the latter covers the basic replacement value in general if
there is a major catastrophe such as a storm that cause damage, fire,
theft or vandalism or personal liability. There is not personal
liability coverage under the home warranty policy, rather it focuses on
the “used” contents of the home.
How a Home Warranty Policy Helps in a Real Estate Transaction
Home Warranty of America is a company that provides very good coverage under their policy (for a list of their benefits, click here)including
13-months of free seller coverage, with coverage beginning on the first
of their home being listed for sale. The free coverage period for the
seller lasts for up to 180 days and the policy is only paid for upon
sale of the home at closing. The best part of a home warranty policy is
that even after the buyer has taken possession of the property, the
coverage continues. That means that as a seller, you will not have to
contend with any last minutes issues that can and do come up. When
applying for the warranty, be sure to choose coverage that address all
potential concerns you may have for the home so that if there were a
need for repairs or coverage, you would have it provided as a benefit.
An
industry association held a study in which it was determined that not
only do homes sell up to 50% faster when there is a home warranty policy
in place, but also the selling price typically comes within three
percent of the list price. In today’s real estate market – this is an
advantage that any seller would want to avail!
Watch on your mobile device >> The Federal
Housing Agency (FHA) doesn’t directly offer loans. Instead, its purpose
is to provide mortgage insurance for Americans to purchase or refinance
a principal residence. To put it another way, the mortgage loans are funded by private lending
institutions (mortgage companies, banks, savings and loan associations,
etc.), and those mortgages are then insured by FHA/HUD. The Benefits of FHA Loans If you qualify as a prospective homeowner, these loans have three great
benefits. First of all, your down payments are lower. Second, closing
costs are also lower. And, finally, it’s easier to qualify for credit. Who Qualifies?
FHA has programs for: • First-home buyers • Seniors • Fixer uppers • Manufactured housing and mobile homes • Energy efficiency, etc. If you’re a first-time home buyer, a FHA loan can be a good deal for
you. See the eligibility requirements below. Later, I’ll cover the
fixer-upper category requirements. Check with the FHA on other programs. First-Home Buyer Programs These programs have the following eligibility requirements: • You must meet standard FHA credit qualifications (judged by the individual’s credit record). • You’re eligible for approximately 97% financing. • You’re able to finance the upfront mortgage insurance premium into the mortgage. • You’re also responsible for paying an annual premium. • Within
this category, the eligible properties are one-to-four unit structures.
As of this writing, the highest maximum FHA mortgage is $362,790 while
the lowest maximum amount is $200,160.
The 203(k) Program for Fixer-Uppers The 203(k) program issues loans to allow you to buy or refinance a
property. In the loan, you can also include the cost of making the
repairs and improvements. The loans are provided through approved mortgage lenders nationwide, and they’re available to buyers wanting to occupy the home. The down payment requirement for an owner-occupant (or a nonprofit
organization or government agency) equals about 3% of the acquisition
and repair costs of the property. There are several steps to obtaining such a loan: • You find a fixer-upper and sign a sales contract after doing a feasibility analysis of the property with a realtor. • The
contract should state that you’re seeking a 203(k) loan. It should also
state the contract is contingent on loan approval based on additional
required repairs by the FHA or the lender. • You then
select an FHA-approved 203(k) lender and arrange for a detailed proposal
showing the scope of work to be done. The proposal should include a
detailed cost estimate on each repair or improvement of the project. • The appraisal determines the value of the property after renovation. •
If you pass the lender's credit-worthiness test, the loan closes for an
amount that will cover the purchase or refinance cost of the property,
the remodeling costs and the allowable closing costs. • The
amount of the loan also includes a contingency reserve of 10% to 20% of
the total remodeling costs. It’s used to cover any extra work not
included in the original proposal. • At
closing, the seller of the property is paid off and the remaining funds
are put in an escrow account to pay for the repairs and improvements
during the rehabilitation period. • The mortgage payments and remodeling begin after the loan closes.
You can
decide to have up to six mortgage payments (PITI) put into the cost of
rehabilitation if the property is not going to be occupied during
construction, but it cannot exceed the length of time it’s estimated to
take to complete the rehab. • Escrowed funds are released to the contractor during construction through a series of draw requests for completed work. • To ensure
completion of the job, 10% of each draw is held back; this money is
paid after the lender determines there will be no liens on the property.
Whew,
somewhat complicated, isn’t it? Well, we’re dealing with a government
program! But, FHA loans can be a good deal for you, and I’m available to
guide you throughout the entire process. Just give me a call today!